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California Immigrant Families Will Benefit from New Tax Credit Eligibility

Last month, Governor Newsom signed AB 1876, which removed exclusions of Individual Taxpayer Identification Number (ITIN) filers for the California Earned Income Tax Credit (CalEITC) and Young Child Tax Credit (YCTC), making it possible for people who do not have a Social Security Number (SSN) to claim credits. Children’s Defense Fund-California, California Immigrant Policy Center, United Ways of California, and a diverse coalition of 60+ organizations secured an estimated $100 million for immigrant-tax filers to access critical working-tax credits. 

We estimate that 600,000 people will benefit from the additional economic resources, which includes over 200,000 children. ITIN filers will be eligible to receive up to $2,982 for the CalEITC and up to $1,000 for the Young Child Tax Credit. This makes California the second state to remove ITIN exclusions and alleviate economic burdens faced by non-citizen immigrants. Since 2015, The CalEITC coalition has worked diligently to establish and expand anti-poverty tax credits for millions of working-class Californians who continue to struggle with basic needs. 

Our coalition has strongly emphasized the need to challenge the structural inequity built into our tax codes system that requires undocumented immigrants to pay taxes but excludes them from working-tax credits and other public benefits. In fact, undocumented immigrants in California pay more than $3 billion in state and local taxes. A mother of two, who files with an ITIN and works a part-time minimum wage job in California is estimated to lose about $7,000 in anti-poverty tax credits for simply not having an SSN. This highlights the discrimination in our federal and state tax systems that erases the contributions of our non-citizen workers who are essential to the fabric of our country. However, the impact of exclusion from tax credits is deeply felt among U.S. citizen children, given that three-fourths of ITIN filers have U.S. citizen children. 

The COVID-19 pandemic further exacerbated economic disparities for undocumented families because they were excluded from critical programs such as unemployment insurance, paid family leave, paid sick leave, and CalWORKS. For example, two out of three immigrant workers excluded from the CalEITC are COVID-19 essential workers. They are our farmers, housekeepers, construction laborers, groundskeepers, and janitors. This made it urgent that we pushed for a sustainable model that is macro-economically beneficial while still benefiting our most vulnerable families–the inclusion of ITINs for the CalEITC and YCTC was that step forward.

Our coalition was committed to making the CalEITC and YCTC available for all–every single family or individual making $30,000 or less should have access to anti-poverty tax credits. We made it possible by garnering support all across California, from mayors of large cities and state multi-caucus letters to community voices and petitions. California’s removal of ITIN exclusion is one important step forward to recognize, acknowledge, and uplift our immigrant families. It reimagines equity that centers our structurally vulnerable communities. Now, other states and the federal government should follow California’s lead and move to end discrimination in our tax system and make anti-poverty tax credits accessible to income-eligible immigrant families. 

2020-10-30T12:28:20-05:00October 30th, 2020|